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Grid, Microgrids, Nano grids and VPPs -  what’s all that about? (Part 1)

This is the first in a series of blogs which present my personal window on the microgrids world over the last few years. I graduated as an electrical engineer in 1988 and started work in power system modelling and analysis then into network protection and design progressing into consulting on technical, economic and regulatory aspects of predominantly electricity based energy systems. I have supported various aspects of distribution, transmission and generation projects in various industry sectors including, water, manufacturing, petrochemical, oil, gas, nuclear, defence, marine, conventional generation (coal, gas, diesel), and renewable generation (onshore wind, offshore wind, marine, tidal, hydro, solar). In more recent years I have worked in the enterprise software space (SCADA, ADMS, OMS, DERMS, ANM, asset management systems). This includes rolls in both a large global OEM who amongst many products also provide battery energy storage systems (BESS) and microgrid control systems, and now also as part of a much smaller enterprise software business, Smarter Grid Solutions (SGS), focussed and specialised in the provision of distribution energy resource management systems (DERMS) and associated utility, microgrid and fleet DER management software. I would note that Smarter Grid Solutions recently became part of the Mitsubishi Electric Company, the large global OEM who also provides amongst many other products BESS which, with SGS software, can offer BESS and microgrid control systems.

In this initial blog, I provide my views on what constitute a microgrid, nano grid, utility grid, and a Virtual Power Plant (VPP) and what are the differences and similarities.

The first thing to clarify is that microgrids have been around for many decades and there are many examples of older municipal, industrial complex, remote community, campus and standby power microgrid systems. I have worked on many power systems with microgrids such as offshore oil and gas production facilities, a range of UK MoD sites such as Faslane Nuclear base, remote off grid industrial complexes such as LNG production facilities in Africa and many others. Some of these were designed for off grid island operation, such as RAF Fylingdales radar station in Yorkshire, and many provide an islanded standby supply should normal grid supply operations be interrupted. However, these were all powered by synchronous generators with associated voltage and frequency controllers to maintain stable operations and typically used diesel or gas fuelled generators. The focus of this series of blogs relates to the more recent deployment of microgrid applications which typically include the displacement of carbon fuel based generation with clean renewable energy sources (RES) such as wind, solar, hydro, energy from waste and the use of energy storage to assist with microgrid operational stability.  

While some new RES based microgrid applications still have a central synchronous machine capability providing frequency and voltage control in island mode, many microgrid applications now have inverter-based electricity sources with a software-based grid forming mode to maintain voltage and frequency stability, often using a suitable battery energy storage system (BESS).

RES based microgrid applications I have encountered that will be discussed in further detail in future blogs include:

A key difference I have noted with emerging RES based microgrids, where a grid connection is available, is the ability to trade services in a range of markets, that a suitable microgrid control system can offer. This is a key area of focus with my present work at SGS.

The final blog (7) in the series will look in more detail at the main drivers (including economic drivers) that are resulting in the uptake of microgrid technology. That final blog will make specific reference to a developing key driver of interest: carbon intensity within the microgrid and explore why it is becoming increasingly relevant.


So, getting back to microgrids, nano grids, utility grids and Virtual Power Plants.

The US Department of Energy offers a more formal definition for a microgrid, describing it as:

‘a group of interconnected loads and distributed energy resources (DER) within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. Microgrids can connect and disconnect from the grid to enable them to operate in both grid-connected and island mode.’

My personal view is slightly broader than this in that a microgrid does not necessarily have to operate in both island and grid mode. A microgrid could operate in island mode only or in grid connected mode only or both. I would consider smaller island networks such as Aruba in the Caribbean or smaller remote off grid networks such as some of the mining towns in Western Australia to be examples of microgrids. This would be in comparison to larger islands such as Ireland or Iceland. However, the distinction between an island with a microgrid and one with a utility grid is open to debate.

I would consider a nano grid to be a microgrid application but at a very small scale and serving a single customer such as an individual house, building or a farm. While it still fits within the definition of a microgrid, the small scale is what leads to the term nano-grid. Nano grids may or may not have the ability to operate as an island independent of a distribution utility grid. A nano grid may only have one DER such as rooftop solar or could be linked with a BESS or second DER. Uptake of nano grid systems with independent island capability is increasing in areas where distribution utility grid supplies are less reliable or in areas being impacted by climate change issues such as California where public safety power shutoffs (PSPS) can turn off electricity supplies to customers for multiple days. Multiple local nano grids can be operated in a microgrid such as a community energy scheme where these share power with each other. Adding a central controller can create the potential for operation as a microgrid.

A utility grid is considered to be a larger scale network compared with a microgrid. This would typically be a distribution utility network with many thousands to millions of customers and generally supplied from a transmission network as well as from DER within the distribution network. The utility grid could also be considered as the transmission network or the transmission network plus the distribution utility grid. Typically, a distribution utility grid would have multiple supply connections from a transmission network and generally would not be capable of stable operations without these transmission supplies i.e. the distribution utility grid cannot operate independently from the transmission grid which provides the balancing between demand and generation to maintain frequency.

A virtual power plant (VPP) aggregates the capacities of multiple types of distributed energy resources (DER) for the purposes of enhancing power generation, as well as trading power on the electricity market. In general, the objective is to network distributed energy resources together in order to monitor, forecast, optimize and trade their power and other system services. DER are typically medium-scale power generating units such as wind farms, solar parks, and Combined Heat and Power (CHP) units, as well as flexible power consumers and storage systems but the definition of DER extends to smaller, customer sited resources as well.  DER can also be aggregations of resources so a VPP itself could be the virtual grouping together of other smaller groups of energy assets at one customer site or one community. Also, a microgrid could be operated as a VPP or a VPP could include a microgrid or multiple microgrids.

While many may argue over the details, the above descriptions are my view on what nano grids, microgrids, utility grids and VPPs are based on my experiences over the last 30 years in the electricity industry. There are legal definitions of utility transmission and distribution grids used by regulators to support license definitions for utility distribution and transmission network operators but the descriptions above are intended for a technical understanding of how to practically manage the DER in each of these entities rather than a legal understanding.

Further blogs will go on to consider categories of microgrid applications, the main drivers that are pushing a renewed uptake of the microgrid concept and some example projects.


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